July 11, 2009

When an individual executes a revocable trust, and properly funds it by transferring her assets to the trust, she will continue to file her normal individual income tax returns. The assets maintain the same tax identification number even though a person has set up a trust. This tax identification number is her personal social security number. There are no changes related to tax information or reporting during her life.

For instance, if Jane Doe properly transfers her bank account from Jane Doe to Jane Doe as Trustee of Jane Doe’s Family Trust, the bank will issue any 1099’s to Jane Doe as Trustee of Jane Doe’s Family Trust. The taxpayer identification number has not changed. So, the income is reported on Jane Doe’s federal form 1040 and whatever state income tax form she regularly utilizes.

Moreover, if Jane Doe were to cease acting as trustee of the Jane Doe Family Trust while she is alive, and the successor trustee was Jack Doe, Jane’s son, Jack should not then change the taxpayer identification number from Jane’s social security number to his. That would be wholly improper. The taxpayer identification number remains Jane Doe’s while Jane is living. That way, the bank continues to send the proper tax information to both Jane and the taxing authorities.

As always, if you have any specific questions, seek legal advice from an attorney in your jurisdiction as any individual’s specific issues are unique to each person.